Carbon Emissions: Greenhouse Gas Reporting

So far this carbon emission blog series has uncovered the meaning of ‘net zero’ and scrutinised the UK’s progress with achieving carbon neutrality by 2050, one year on from when the target was announced. Moving the focus to business, the last blog explored upcoming carbon reduction policy measures and interest group recommendations for responding to a net zero ambition. This final blog of the carbon emission series will provide practical guidance on greenhouse gas emission reporting and the tools available to help start your journey towards a carbon-neutral future.

Why report your carbon emissions?

While monitoring your emissions demonstrates your commitment to operating sustainably, carbon emission reporting may also be a legal requirement. For example, large carbon-intensive organisations must report and reduce their emissions through participation in the EU Emission Trading Scheme. Furthermore, carbon emission and energy use disclosure is now mandatory for large unquoted, limited liability partnerships and quoted companies of a certain size under the Streamlined Energy and Carbon Reporting (SECR) framework (see our blog on this for further information). Considering the national ambition to be net zero by 2050, it is expected that the legal requirements for carbon emission reporting will become more stringent.

How to produce an emission inventory?

The Greenhouse Gas (GHG) Protocol provides an internationally recognised standard for corporate greenhouse gas emission reporting and is used as the basis for other national and international schemes such as ISO 14064-1 and the Carbon Trust Standard (GHG Protocol, 2020). UK Government Environmental Reporting Guidance is also based on the GHG Protocol and it is recommended that this guidance is consulted before compiling an emission inventory. While this blog should not be used as a complete guide on how to report your emissions, the process for reporting is summarised below to provide a clear understanding of what is required.

Step 1 – Determine your reporting period

To start, you must first decide what your reporting period will be. Many organisations align their emission reporting to the financial year (April – March) for consistency. You must also set a baseline year, which is usually the first year of emission reporting. This baseline year should be compared to future reporting periods to monitor how emissions have changed over time.

Step 2 – Establish your organisational boundary

Before compiling your inventory, you must first decide which parts of your organisation you need to collect the data on. For some businesses, this may not be straightforward, as your organisation may be part of a complex business structure where it is difficult to determine responsibilities for the emissions produced by different operations. In this scenario there are two approaches:

• The equity share approach – under which a company accounts for emissions from operations according to its share of equity in an operation.
• The control approach – under which a company accounts for 100% of the emissions from operations it has control over and does not account for emissions from operations where it has an interest but no operational (i.e. has authority to implement operational policies) or financial (i.e. can direct financial policy for economic benefits) control.

Step 3 – Determine which activities produce emissions and how they should be reported

You must report each of your emission-producing activities separately (e. vehicles, boiler use, purchased energy) and categorise them according to their scope (see Table 1 below). In addition to carbon dioxide, you should also report on any other greenhouse gases resulting from your activities, which include:

• Methane
• Nitrous Oxide
• Nitrogen Trifluoride
• Hydrofluorocarbons (HFCs)
• Perfluorocarbons (PFCs)
• Sulphur Hexafluoride.

Table 1

Due to the complexity of obtaining accurate data for Scope 3 emissions, the GHG Protocol has published additional guidance and recommendations (Corporate Value Chain Scope 3 Standard). Currently, reporting of Scope 3 emissions is not a requirement of any UK legislation.

Step 4 – Determine data collection method

Data on some direct emissions can be obtained at the source using accurate continuous emission monitoring equipment (CEMS). For other emissions, the most common approach used to calculate emissions is to apply emission conversion factors to known activity data.

Examples of activity data include total kilowatt hours (kWh) of energy used from a recent bill or total litres of fuel purchased from invoices for company vehicles. When multiplied by the conversion factor, the equivalent CO₂ emissions can be calculated. UK Government publish reliable conversion factors online on an annual basis, which are free for all organisations to use.

Step 5 – Set targets and seek external verification

Once you have collected a full year’s worth of emission data, the next logical step is to set a realistic reduction target from your baseline year. As discussed in our previous blog, the Science Based Targets Initiative (SBTi) recommend that your reduction target is aligned to 1.5°C warming limit, which can be achieved by setting a 2050 net zero target.  Another final step to consider is seeking external verification, as this assurance will increase the credibility of your inventory.

Did you read our first and second blogs in this series?